Here's How the Best Revenue Growth Strategies Stand Apart
- Good revenue growth strategies define the actions that achieve targeted revenue results in the shortest time and least cost.
- Better growth strategies benefit from more market research and competitive intelligence to exploit competitors and win market share. They shift from company differentiation to competitive advantages. They know the fastest route to sustained revenue growth is satisfying customers, so they adopt a mix of company and customer objectives. They also elevate performance reporting from lagging to leading indicators. Above all, they are disciplined. They don't dilute focus or permit work that distracts from the goal. They know what not to do.
- The best revenue growth strategies shift from building competitive advantages to sustainable competitive advantages. They are rich with market research, entirely data-driven and fact-based. They focus on actions that build progressive and synergistic results, whereby those actions deliver the intended results and jump start future results. Business strategies are holistic. They show how results are integrated across departments or lines of business. They also achieve enterprise-wide buy in, ownership and accountability.
Good, Better and the Best Revenue Growth Strategies
A business growth strategy defines a calculated approach to achieve a growth objective. Most often that means a deliberate approach to grow revenue or market share at the least cost and in the shortest time.
Company strategies capitalize on core competencies and design competitive advantages that create or extend differentiation. They demonstrate how the company will win customers, position the brand relative to competitors and make the investment needed to achieve the goal.
The most recent Business Growth Report shared an 89 percent correlation among companies with mature revenue strategies and companies that achieved the highest revenue growth rates in their industries. That's not a coincidence.
Clearly, the quality of a growth or revenue strategy is commensurate with the likelihood of being successful. So, to that end we have extracted data points from both quantitative and qualitative research to define the good, better and best revenue growth strategies.
Good Growth Strategies
Good business strategies demonstrate clear purpose, priorities and intent. They also share the below characteristics.
- Good revenue strategies are built on core competencies. They exploit company experience, intellectual property and know-how.
- They are opportunistic. The identify growth opportunities within their market and their potential.
- They are focused. No business can be everything to everybody so good strategies pursue the best or most promising objective and optimize their limited budget and finite resources around it. Their strategy defines their investments and their investments define their strategy.
- They create or build upon competitive differentiation. The growth strategy defines brand positioning, and how the brand is unique relative to competitors. As strategist Michael Porter says, "Strategy is about making choices, trade-offs; it is about deliberately choosing to be different."
- They strive to keep it simple. Simplicity is created when the revenue strategy is clear, precise and easily understood at all levels in the company.
- They maintain tight alignment with tactics. They also ensure that the tactics roll-up from the bottom to the top of the company and collectively achieve the strategic goal. They know the differences between strategy and tactics, and they know tactics are all about execution. As authors Jim Collins and Jerry Porras say in their book, Built to Last: Successful Habits of Visionary Companies, "Building a visionary company requires one percent vision and 99 percent alignment."
- And possibly most important, they ensure the company pursues the right route to the revenue destination. As Peter Drucker advises, "Doing the right thing is more important than doing the thing right."
Better Growth Strategies
These company strategies have more focus and depth.
- They are built on competitive advantages. No business operates in a vacuum or without competition. So strategists assess their most direct competitors' strategies and exploit them to outperform and capture market share. Strategists know that advantages are only competitive advantages if they are relevant, measurable and unique. The first two items are the easy two but being unique is what truly separates good from better strategies. So, the revenue growth strategy explicitly defines the path to increased differentiation. It shows how the company is unique, how it will compete and how it will win customers. Competitive positioning is often defined by customer markets, products and go-to-market execution.
- Better revenue strategies are market aware. They shift their planning from an inside-out company perspective to an outside-in market recognition. These strategists are self-aware and not overconfident. They invest in extensive research, planning, and internal reflection. They accept they do not have all the answers but are committed to finding them. They know the fastest route to sustained revenue growth is satisfying customers, so they view market opportunities from the customer perspective. That shifts the strategy from pursuing company objectives to a mix of company and customer objectives.
- They maintain disciplined focus. That's evidenced in deciding what to stop doing and knowing what not to do. Pet projects, sacred cows and skunkworks projects make this harder than it sounds. This point is aptly made by Michael Porter who advised, "The essence of strategy is choosing what not to do." Budgets are an effective tool to demonstrate priorities and limit distractions.
- Better revenue strategies shift performance metrics from historical measures to forward-looking metrics and leading indicators. They use the most salient key performance indicators (KPIs) to predict success at journey milestones and for the strategy end goal. They change the view from hindsight to foresight.
The Best Revenue Growth Strategies
The best revenue growth strategies do pretty much everything described so far but take a few additional steps to drive a much bigger impact.
- They are built on sustainable competitive advantages. Competitive advantages used to be things like products, price, staff, service and location. But in the minds of customers these are all easily substitutable and highly commoditized. Competitive differentiation used to be things like brand management, lean manufacturing, efficient distribution, and IT but these are now table stakes.To cut to the chase, for most industries there are only four sustainable competitive advantages and they are innovation, culture, customer affinity and predictive analytics. These are the only four competitive advantages that are not easily copied by competitors or displaced with new technologies. The best revenue growth strategies build upon and exploit some combination of these four sustainable competitive advantages to outperform competitors and acquire customers.
- The best revenue strategies go deep in competitor and market analysis. They assess their most direct competitors' strategies – and exploit them. The twofold approach of mitigating their competitors' strengths and exploiting their weaknesses creates a catalyst to outperform and capture market share. Sometimes it creates a platform for exponential market share growth. Strategists may also find exponential growth in adjacent markets, especially when considering a market development strategy. The additional market research uncovers gaps in the market and verifies there are markets in those gaps.
- The best revenue strategies are holistic. They show how actions and results are integrated across departments or lines of business and how they impact the revenue goal. The business strategy is no longer mostly relegated to the executive team and upper management. There is now enterprise-wide buy in, ownership and accountability.
The strategy is promoted and understood throughout the company. If asked, most employees could cite the corporate strategy. And every employee understands how they contribute to it. The strategy is directly supported by the company culture (one of the four sustainable competitive advantages) and guides day to day decision making without onerous rules.
- The best business strategies are data driven and metrics measured. The data consists of company performance history, industry benchmarks and market conditions. Guesswork and subjective decisions are replaced with data-driven, fact-based objective decisions. The metrics are more forward looking and include predictive analytics with confidence levels. The analytics are cognitive and capable of finding the best answer where there is no right answer.
- Governance is a hallmark of the best business strategies. Good governance adopts cadence, communications and clearly defined roles to advance passive stakeholder reviews to active executive oversight. Business is not static and even the most informed projections may vary. Frequent reviews, continuous measurements and immediate course corrections, and if needed pivots, are tools to keep the company moving toward its revenue goal. If the revenue growth plan falls short, governors immediately work with management to adopt a remediation plan to get back on track.Governors are budget mavens. They know the budget more so than words expresses the growth strategy and the company's priorities. They track budgets to ensure resources are allocated as intended. They analyze variances and adjust as needed. As legendary CEO Jack Welch once said, "Strategy is simply resource allocation. When you strip away all the noise, that's what it comes down to."
- The best revenue strategies build intellectual muscle. In his book, Good Strategy, Bad Strategy, author Richard Rumelt writes: "The most basic idea of strategy is the application of strength against weakness. Or if you prefer, strength applied to the most promising opportunity. A good strategy does not just draw on existing strength, it creates strength."Rumelt makes a great point that I've witnessed many times over three decades. Executives with a history of failed revenue performance deplete themselves and their companies. They are exhausted from working too many hours and demotivated from coming up short.
On the flip side, executives with a history of achieving revenue strategies get stronger. Their success creates institutional learning which make next year's revenue target that much easier. Great strategies make you stronger.